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The world’s first, full-service conservative Internet broadcast networkFri, 09 Dec 2016 17:41:21 +0000en-UShourly1https://wordpress.org/?v=4.6.116302432Kaiser Foundation poll: Only 26% want Trump and the GOP to fully repeal ObamaCarehttp://hotair.com/archives/2016/12/01/kaiser-foundation-poll-only-26-want-trump-and-the-gop-to-fully-repeal-obamacare/
Thu, 01 Dec 2016 16:31:56 +0000http://hotair.com/?p=3934055Does this help explain why the GOP is suddenly talking about a three-year delay in implementing repeal of the law? Is the internal polling picking up new misgivings among the public?

The revolution is canceled. Or postponed. Whatever.

Notice that the sum of those who want to keep the law as-is or even expand it is greater than the sum who want to scale it back or get rid of it altogether. Must be Democrats driving that, no? Well, yes — but they’re being helped along by a sudden spell of cold feet among Republicans. Note the shift in just one month, before and after the election:

Lotta movement there on the right from “repeal the damn thing” to “let’s go slowly.” What explains it? Could be that some of it is just normal fluctuation in public opinion. Click and scroll down to Figure 3 and you’ll see that the favorable/unfavorable numbers for ObamaCare have bounced around a lot over the past six years. The law’s unfavorable rating is almost always the higher of the two, but the gap has varied widely over time — and it’s complicated by the fact, as noted above, that some liberals also view the law unfavorably because it’s not expansive enough for their tastes. Maybe the shift among Republicans is just part of the traditional statistical noise. Or maybe it’s a reaction to what Trump said after his Oval Office meeting with Obama a few weeks ago. Remember that? He spent 90 minutes or so with O and suddenly started wondering aloud if maybe amending the law might be a better idea than replacing it wholesale. Some Republican voters might have read about that and concluded that if Trump thinks scaling back the program would work better than scrapping it, he must have his reasons.

I do think there’s a cold-feet element to this, though. It seems too coincidental that we’d see a shift this dramatic on the right surrounding a presidential election. The numbers here reminded me of the shift in opinion on abortion after Obama was elected to his first term. Note the bounce in pro-life identification between 2008 and 2009:

Year after year during the Bush administration, more Americans identified as pro-choice than pro-life. Then, overnight in 2009, the numbers flipped. How come? My guess is that some fencesitters on the issue, who either don’t feel strongly about it or are conflicted by the merits of the arguments on both sides, were reacting to their worries that the new pro-abortion president would go too far in liberalizing the practice. Anticipating Obama’s radicalism on the issue, they reacted by tilting the other way. You may be seeing something like that in the O-Care numbers. Year after year, Republican voters could shout “REPEAL AND REPLACE” and not have to think through the consequences of that since everyone understood it wasn’t going to happen. Now it is going to happen — the health insurance industry is going to be torn up again, root and branch, for the second time in six years. New rules, new bureaucracy, tons of upheaval for consumers, and the man in charge of it all is, er, Trump, who’s already seen by many voters as impetuous. Go figure that some Republicans would move from demanding insta-repeal to a more cautious “scale back” plan.

And don’t forget either that parts of the law are popular, even on the right. Click and scroll down to Table 2. Of 10 different elements of ObamaCare listed, Republicans support eight of them at 63 percent or better; the only two measures that fail to draw a majority of GOPers are the employer mandate and the individual mandate. (Never mind that the individual mandate is the means of paying for all of the goodies in the law that Americans do like. Voters want this lunch to be free, as usual.) The sudden and unexpected reality on November 9th that the reaper is coming for ObamaCare undoubtedly forced some people to consider for the first time in a real way that the stuff in the law that they support — guaranteed coverage for people with preexisting conditions, the right of young adults to use their parents’ insurance up to age 26 — might be on the chopping block. That was destined to move even some Republicans from the “repeal” to the “scale back” column.

There’s no sense dwelling too much on a poll, though, especially one that tells Republicans something they don’t want to hear. After the polls missed Trump’s victory (even though they got the popular vote pretty much right), it’ll be years before unfavorable data of any kind is taken at face value. Besides, there’s no question that the GOP will repeal O-Care. They’ve spent too much political energy demanding that since 2010 to wobble now and opt for “amending” the law instead. Passing a repeal and then delaying it for three years would be a disaster for many reasons, though, starting with the fact that neither Trump nor his party are going to want to deal with the politics of installing a complex new insurance system in 2019-20, right in the thick of the next presidential campaign. “Repeal and delay” is destined to end up with the GOP either extending the delay further or reversing course and eventually preserving ObamaCare in some form, which will anger and demoralize Republicans. Trump just put Tom Price at HHS for a reason, because he has a vision for how a post-ObamaCare system should look. What are they waiting for?

]]>3934055Biden: The United States is the world’s only non-xenophobic major economy, you knowhttp://hotair.com/archives/2014/06/10/biden-the-united-states-is-the-worlds-only-non-xenophobic-major-economy-you-know/
http://hotair.com/archives/2014/06/10/biden-the-united-states-is-the-worlds-only-non-xenophobic-major-economy-you-know/#commentsWed, 11 Jun 2014 00:01:40 +0000http://hotair.com/?p=311424It took me a moment to figure out what Biden was attempting to say here, but I think I have it: In trying to make the argument for moving forward with immigration reform in front of the National Association of Manufacturers, he made the point that America should be actively trying to attract skilled immigrants in order to “keep our edge” in the international industrial scene — but… very, very badly. Birth rates in countries like Germany, Japan, and China have leveled off, he noted, even reaching the point where they are below the population replacement rate. Partially to address this problem, he offered, Japan is trying to keep more women in the workforce — but only because they’re so “xenophobically” averse to welcoming immigrants that they have left themselves with no other option? And we should take advantage of that by enacting immigration reform? I think? That got weird.

Moody’s Investor Service has changed its outlook for the U.S. health care insurance sector from stable to negative, citing Obamacare’s rollout and the uncertainty it brings.

The private credit rating agency said potential fallout from the Affordable Care Act’s implementation — including changes to the individual market and the impact of the law’s “employer mandate” on commercial group plans in January 2015 — presents the greatest challenge to health insurers’ credit profile. Lower reimbursement rates among Medicare Advantage plans also are creating financial pressure, it said.

“While all of these issues had been on our radar screen as we approached 2014, a new development and a key factor for the change in outlook is the unstable and evolving regulatory environment under which the sector is operating,” Moody’s said. “Notably, new regulations and presidential announcements over the last several months with respect to the ACA have imposed operational changes well after product and pricing decisions had been finalized.”

First came the president’s panicky, ass-covering call to un-cancel plans, replete with promises to use the law’s bailout provisions to help insurers cover the extra cost. Then came the mandate penalty waivers for people who’d lost their coverage, which treated ObamaCare itself as a “hardship” worthy of an exemption for individuals. Then came the shifting enrollment and payment deadlines in December, creating a backlog of applications that insurers are still coping with. And then came the threat from Sebelius to boot companies from the exchanges next year if they didn’t let people pay their first month’s premium after coverage went into effect on January 1. Hard to believe in hindsight, but that witches’ brew of uncertainty was concocted over just five short weeks, from mid-November to the week before Christmas. The news isn’t that insurers are now an unacceptably unstable investment due to capricious politicized meddling by the feds. The news is that that was inevitable and yet only now is Moody’s getting around to the downgrade. Of course the outlook’s negative, silly.

And the uncertainty’s not going away soon. On the contrary, here’s what Megan McArdle sees in the crystal ball:

· 2014: Small-business policy cancellations. This year, the small-business market is going to get hit with the policy cancellations that roiled the individual market last year. Some firms will get better deals, but others will find that their coverage is being canceled in favor of more expensive policies that don’t cover as many of the doctors or procedures that they want. This is going to be a rolling problem throughout the year.

· Summer 2014: Insurers get a sizable chunk of money from the government to cover any excess losses. When the costs are published, this is going to be wildly unpopular: The administration has spent three years saying that Obamacare was the antidote to abuses by Big, Bad Insurance Companies, and suddenly it’s a mechanism to funnel taxpayer money to them?…

· 2014 and onward: Medicare reimbursement cuts eat into hospital margins, triggering a lot of lobbying and sad ads about how Beloved Local Hospital may have to close.

· Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year. That’s going to be a nasty shock to folks who thought the penalty was just $95. I, like many other analysts, expect the administration to announce a temporary delay sometime after April 1, 2014.

They’ll probably delay or scale back the small-business cancellations too. Why wouldn’t they? Why play this shell game of moving around deadlines and granting exemptions in 2013 to protect the party if they’re going to sit idly by while millions upon millions of people are booted from their employer plans in an election year? This is the deeper point of the Moody’s downgrade: The insurance industry is now essentially a political creature, and politics can change quickly. How’s an investor supposed to assess risk if he or she can’t know whether the president might need to knock over the chessboard at any given moment for his own political interests? Even if you think Obama and the Democrats are so invested in O-Care’s success that they’ll find a way to keep federal money flowing to prop it up, the lingering bitterness after the law was passed on party lines and the recurring fact of potentially game-changing elections means it’ll be years before the industry enjoys real stability. And yet, in partnering with O on sweeping reform in the expectation that it would bring them millions of new customers, this is what insurers signed up for. They bought the ticket. Hope they’re enjoying the ride.

]]>http://hotair.com/archives/2014/01/23/moodys-downgrades-outlook-for-insurance-industry-to-negative-thanks-to-obamacare/feed/68294603Quotes of the dayhttp://hotair.com/archives/2014/01/16/quotes-of-the-day-1616/
http://hotair.com/archives/2014/01/16/quotes-of-the-day-1616/#commentsFri, 17 Jan 2014 03:41:39 +0000http://hotair.com/?p=293801Health and Human Services Secretary Kathleen Sebelius is in Tampa today, Monday, January 13, for an ObamaCare outreach event, and she owes Floridians an answer. Why should taxpayers have to bail out health insurance companies in the increasingly likely event that ObamaCare leaves them with financial losses?…

This is government favoritism and corporate cronyism at its worst, and it’s taxpayers that will pay the price unless we stop it…

Unfortunately, we can’t just take the administration’s word that it won’t happen. Congress has to act, and it should approve legislation I’ve introduced to repeal ObamaCare’s risk corridor provision and stop any bailout. At just a page long, my bill is simple but would instantly wipe away the taxpayer’s exposure to millions – and potentially billions – of dollars’ worth of a bailout for insurance companies.

If the only way ObamaCare works is with a taxpayer-funded bailout of insurers, it’s yet another clear sign that the law can’t survive and isn’t worth saving.

***

As Philip Klein notes, a recent article by Larry Levitt, Gary Claxton, and Anthony Damico of the Kaiser Family Foundation described an enrollment of 25 percent among 18-34 year olds as a “worst-case scenario,” estimating that insurers would lose money on these plans, because “overall costs…would be about 2.4% higher than premium revenues.”

2.4 percent may seem like a small number, but given that the average insurer has profit margins of 4 to 6 percent, a 2.4 percent loss on premiums—before we even count overhead costs—is a serious problem…

The national skew, now 49 percent, may come down to 35 or 40 percent, by the time we get to the end of the open enrollment period in March. But the bottom line is that insurers will still lose money on these plans. And there are other aspects of adverse selection. For example: are we seeing sicker participants within a given age group, regardless of age? Are the healthy people in the exchanges skewing towards high-deductible bronze plans, while sicker people buy more generous silver and gold plans?

The bailout analogy is potent. And it’s certainly accurate to say that, under Obamacare, some insurers may collect payments from the government to help offset losses. But the analogy breaks down after that…

The payouts from risk corridors … come directly from government funds and have no actual limit. But the risk corridors also build up government funds—in effect, by claiming some of the profits from insurers who reap unexpected windfalls. The Congressional Budget Office, in its overall cost estimates for the Affordable Care Act, assumed that the inflow and outlfow would be roughly the same, so that the risk corridor program as a whole would be budget neutral. Even if CBO’s prediction is wrong, and the government ends up spending more than it raises, the difference is likely to be modest. The formula for payouts calls merely for government to share in high losses or gains, not to take them on completely. It’s enough to protect the insurers, the thinking goes, but not enough to cause a massive outlay. Meanwhile, lower-than-expected premiums are likely to save the government much more money than the risk corridors would ever pay out.

***

Cohn is correct that the CBO estimated that the cost of the program to taxpayers would be zero because it figured that some insurance companies would over estimate patient expenses and others would under estimate them, and these over and under estimations would cancel each other out. Sort of like how banks who bought tons of mortgage backed securities estimated that some mortgages would go bad, others would be just fine, but as long as there was a normal mix the underlying assets would be fine.

But just as banks made a “grievous management error” by never considering what would happen if large percentages of the mortgages in mortgage back securities all went bad, the designers of Obamacare never considered what would happen if every insurer under estimated how much it would cost to pay for insurance claims. And if the current mix of Obamacare enrollees looks anything like the final mix, that is exactly what is likely to happen: all the insurance companies will qualify for payments from the risk corridor program and no one will be paying in.

The risk of a “death spiral” is over. The Kaiser Family Foundation estimates that if the market’s age distribution freezes at its current level — an extremely unlikely scenario — “overall costs in individual market plans would be about 2.4% higher than premium revenues.” So, in theory, premiums costs might rise by a few percentage points. That’s a problem, but it’s nothing even in the neighborhood of a death spiral.

That calculation, however, omits the transitional policies in Obamacare that help insurers keep premiums low as the risk pool sorts itself out over the first three years. Add those in, and it’s unlikely that 2015 will see any premium increase at all. Robert Laszewski, a consultant for the insurance industry, agrees. “I think the 2015 rates will be the rates you’re looking at today, more or less,” he says.

***

[M]y sense is that health plans, because they are so insulated from big losses, will generally stand pat with their 2014 rate structures for 2015––no matter how bad the early claims experience looks. I expect that the health insurance industry will be content to give the Obama administration one more chance to reboot Obamacare in the fall of 2014, when the 2015 open enrollment takes place.

[U]nless the demographics of the exchanges improve pretty quickly, the three temporary risk-adjustment programs are probably set to transfer a large hunk of cash to the insurance companies. That’s what the administration, and the insurers, want to happen; it’s how they are going to keep the insurers on board for 2015. Phil Klein at the Washington Examiner points out that Humana Inc.’s latest filing with the Securities and Exchange Commission warns of a “more adverse than previously expected” mix of customers enrolling through the exchange — but it doesn’t change its earnings forecast for 2014. So either it thinks its losses will be trivial relative to overall earnings or Humana thinks the chances of a bailout from the administration are basically 100 percent.

But while the business logic is obvious, the political logic is considerably more dubious. I was initially skeptical that a repeal of the risk corridors had any chance of getting through a Democratic-controlled Senate, but I’ve heard a persuasive argument that this is just so politically toxic that Senate Democrats, and even the White House, may well go along. The optics of funneling money to the insurers through these programs is absolutely terrible. And now they are asking the administration for more money — the insurers want the extra expenses that the exchange debacle has imposed excluded from calculating their “medical loss ratio” requirements, which mandate that at least 80 percent of their expenses go toward treatment, not administrative overhead. I think the requirements are pretty silly, as a policy, but they are extremely popular. Asking the administration for a break on this is almost begging members of both parties to beat the snot out of them. White House attempts to explain that it isn’t a bailout will be complicated by the fact that it obviously kind of is.

***

The GOP House should pass [an anti-bailout bill] and send it to Harry Reid’s Democratic Senate. Democrats know it could be fatal for Obamacare. The only alternative would be single-payer. And try selling that to the country after the spectacularly incompetent launch of — and subsequent widespread disaffection with — mere semi-nationalization.

Do you really think vulnerable Democrats up for reelection will vote for a bailout? And who better to slay Obamacare than a Democratic Senate — liberalism repudiating its most important creation of the last 50 years.

Want to be even bolder? Attach the anti-bailout bill to the debt ceiling. That and nothing else. Dare the president to stand up and say: “I’m willing to let the country default in order to preserve a massive bailout for insurance companies.”…

]]>http://hotair.com/archives/2014/01/16/quotes-of-the-day-1616/feed/328293801The return of the Christmas-tree tax?http://hotair.com/archives/2013/12/26/the-return-of-the-christmas-tree-tax/
http://hotair.com/archives/2013/12/26/the-return-of-the-christmas-tree-tax/#commentsThu, 26 Dec 2013 21:01:49 +0000http://hotair.com/?p=291684The domestic fresh-cut Christmas-tree industry certainly hopes so — and heck, who can blame them, really? So many other niche special interest groups, particularly in the agribusiness sector, have successfully managed to rent-seek for federal protection from consumer choice in the free market — be it in the form tax credits, or import quotas, or direct payouts, or what have you — why wouldn’t these guys try to get a piece of the action?

Back in 2011, the Obama administration announced that they planned to succumb to the Christmas-tree industry’s years of lobbying and implement a “fee” on growers that would pay for a specialized marketing program for American-produced Christmas trees. The industry really wanted the federal government to charge and collect the “fee,” rather than collect the money from amongst themselves, in order to thwart any tree companies that might not want to pay in to what the industry believed should be a group effort (even if they had to force it out of ’em!) in promoting freshly-cut domestic trees over artificial and foreign-sourced trees.

It took only a matter of days for the Obama administration to put an indefinite stay on those plans, however, because the public reaction to what would essentially amount to a run-around tax on consumers was swift and fierce — but the tree industry has yet to give up on the endeavor. They’re still hoping they can sneak the sought-after provision into the latest iteration of the still-pending farm bill, via The Hill:

The U.S. Department of Agriculture (USDA) in 2011 moved to create a marketing and research program for Christmas trees that would have been similar to the “Got Milk?” or “Pork: The other white meat” campaigns. …

Farmers haven’t given up on the idea, and are now pushing to have the program authorized in the farm bill legislation that is being negotiated by the House and Senate. They say they’re at risk of being run out of the market, and insist the program would involve “zero tax dollars.”

“Fresh cut Christmas Tree producers have long been concerned about losing market share to artificial tree makers and foreign imports,” National Christmas Tree Association spokesman Rick Dungey told The Hill in an email. “There are zero tax dollars involved here. USDA bills all costs associated with these promotional efforts to the industry groups that create the boards.” …

“There are more and more households that may be making a decision to display a petroleum-based import from China instead of a U.S. farm-raised product,” said Craig Regelbrugge, who represents the industry in Washington as vice president for government affairs with the American Nursery and Landscape Association.

Way to throw “petroleum-based” and “China” into that succinct little defense — those are always such great anti-free trade buzzwords, you know — but the fact of that matter is that if American consumers are choosing to purchase less expensive and/or more convenient substitutes to American-grown, farm-fresh Christmas trees, it is absolutely not the federal government’s business to interfere by heaping more bureaucracy onto our already convoluted tax and regulatory codes to try and deter them from doing so. This would be yet another seemingly harmless little provision that really only serves to stymie the beneficial free-market mechanism of competition and consumer choice — which in turn only serves to hamper American competitiveness on the global market in the long run.

]]>http://hotair.com/archives/2013/12/26/the-return-of-the-christmas-tree-tax/feed/47291684Bob Laszewski: The demographic mix in some ObamaCare risk pools right now is “very, very bad”http://hotair.com/archives/2013/12/11/bob-laszewski-the-demographic-mix-in-some-obamacare-risk-pools-right-now-is-very-very-bad/
http://hotair.com/archives/2013/12/11/bob-laszewski-the-demographic-mix-in-some-obamacare-risk-pools-right-now-is-very-very-bad/#commentsWed, 11 Dec 2013 23:01:25 +0000http://hotair.com/?p=290131I wish he had been more specific about what “very, very bad” means and how many plans are in trouble because of this, but his previous criticisms of O-Care and Healthcare.gov have been accurate so there’s little reason to doubt that this one is too. On the contrary, this is consistent with the dog that didn’t bark in the HHS enrollment data released this morning. If the composition of the risk pools looked good, with oodles of “young invincibles” signing up to subsidize people with preexisting conditions, Obama and Sebelius would be shouting it from the mountaintops. The progressive goalposts, always capable of quickly shifting, would move instantly from “how many people have signed up?” to “how’s the demographic mix of the risk pools?”. That’s what’s really important, don’tcha know.

The answer to each question in turn: Not enough people have signed up, and per Laszewski, not enough of the ones who have are the healthy youngsters insurers desperately need.

Older clients, aged above 40, comprise 60 percent of the new Obamacare customers at one of his client health-care companies, Laszewski told The Daily Caller.

The skew is “very, very bad,” said Laszewski, who is president of Health Policy and Strategy Associates, Inc…

Precise predictions are impossible because the Obamacare system is so new, and executives do expect a surge of people to join in the next two weeks, Laszewski said.

But the apparent lack of young people “is a very poor omen,” Laszewski said.

Not the first time we’ve heard that the risk pools are older and grayer than HHS hoped. The October data for some plans showed the average age of enrollees climbing above 50. In Connecticut and Kentucky, the biggest segment of enrollees came from the 55+ group; in California, which operates the largest state exchange, 56 percent of October enrollees were older than 45 and, of that group, a majority were over age 55. Just 23 percent came from the coveted 18-34 demographic. But all of that was expected: It stands to reason that the first rush of sign-ups after the exchanges launched would come from older, sicker people who are desperate to get coverage. The significance of Laszewski’s comments today is that he seems to believe that the skew has persisted, at least in some segments, well into December. Again, though, I wish he’d given us numbers. According to HHS, the exchanges will be fine if 40 percent of enrollees are young and healthy. Laszewski told the Daily Caller that 60 percent of new enrollees in some plans are older than 40. That … doesn’t sound terribly skewed, frankly. And since it’s the lazy and/or distracted youngsters who are expected to finally sign up in the last enrollment crunch before Christmas, there’s reason to think that the risk pools might be even more balanced by New Year’s. It would, presumably, be very easy for HHS to clue us in on all this, but as I say, they’re keeping their mouths shut. Which almost certainly means it’s bad news, i.e. Laszewski’s right.

It’s not just the age mix that’s confounded predictions. Patrick Brennan notes a curious trend in the HHS data released today:

About one-fourth of the people who have entered their income information on their applications were deemed eligible for subsidies on the exchanges (about 900,000 out of about 3.6 million), which is lower than the number we saw in October alone and remains really far from what was projected. The CBO projected that just 1 million out of the 7 million people to enroll in the exchanges in the first year would be ineligible for subsidies, so the ratio is way off from what was expected (15–75 vs. 75–25). I had some thoughts on that surprising fact a month ago, and I’ll add a couple now: Unsubsidized customers (basically, those above the national median income) are generally savvier and more likely to have the resources to enroll and make their payments ahead of time, so maybe this is understandable and doesn’t say anything about who will eventually enroll. On the other hand, it may demonstrate that the people to whom insurance was supposed to be expanded — the uninsured, who tend to be low-income and not well educated — aren’t getting to the exchanges at all, and covering them will be a much longer term project.

CBO made a rational assumption: If you expand coverage to people irrespective of preexisting conditions and subsidize those with smaller incomes to make their premiums more affordable, it stands to reason that lower-income people who’d been priced out before will leap at the chance to buy insurance once it’s available in October. Right? They’re the “winners” from the law. Uncle Sam’s helping them out with a little welfare towards their health insurance. Why not avail themselves? What we’re seeing instead is higher-income people who don’t qualify for subsidies enrolling. Maybe that’s because they, more so than lower-income folks, used to have insurance and were recently canceled, making them desperate to get new coverage before January 1st. If you’re poor and have spent years without insurance, you might be so used to it that you don’t bother to hurry when the exchanges open. Or maybe the premiums are so high even after you discount them for subsidies that some poorer consumers still can’t afford them and are holding out for the time being. Or maybe the subsidy problem is a function of the poor demographic mix right now: The “young invincibles” who are just starting out in the labor market (if they’re lucky enough to find a job) are, I’d guess, way more likely than older middle-class people to need a little help paying their premiums. If they’re not signing up yet, then naturally the risk pool will be older and wealthier. Good news for taxpayers at the moment, in that the subsidies are flowing relatively slowly from the tap, but bad news later if the skewed risk pool persists and HHS has to bail out insurers from their adverse selection problem.

Anyway. Senate Democrats have decided that Obama’s fixes to the law aren’t nearly enough and so they’re working on their own fixes, pretty much of all which will only make the adverse selection problem worse and a bailout more likely. They’re the Smart Party, remember.

]]>http://hotair.com/archives/2013/12/11/bob-laszewski-the-demographic-mix-in-some-obamacare-risk-pools-right-now-is-very-very-bad/feed/66290131Payoff: Feds to increase “risk payments” to insurers in return for un-canceling planshttp://hotair.com/archives/2013/11/26/payoff-feds-to-increase-risk-payments-to-insurers-in-return-for-un-canceling-plans/
http://hotair.com/archives/2013/11/26/payoff-feds-to-increase-risk-payments-to-insurers-in-return-for-un-canceling-plans/#commentsTue, 26 Nov 2013 19:51:11 +0000http://hotair.com/?p=288674We all know about the “risk corridor” at this point, yes? Designed to spread the risk of budget overruns among insurers, it could end up as a mechanism for a federal bailout of the industry if the ObamaCare exchange risk pool ends up being much older and sicker than everyone expects. When King Barack declared that he’d allow insurers to un-cancel old plans, notwithstanding what the ObamaCare statute has to say about it, he increased the odds of that bailout being necessary by allowing healthy people to leave the exchange risk pool (temporarily) and revert to their old, cheaper coverage. That means less revenue for insurers, which of course makes budget overruns for the exchange plans more likely. How could O possibly make it up to them?

You know how. A day after Obama announced his “fix” that doesn’t actually fix anything, CMS sent a letter to insurers reassuring them that the agency would “explore ways to modify the risk corridor program final rules to provide additional assistance.” Translation: The feds are going to shovel a little extra taxpayer money their way to cover the extra cost imposed by O’s buck-passing, ass-covering, eleventh-hour attempt to keep his “if you like your plan” promise after all. And now, here it is:

The U.S. government has issued a proposal that would likely increase risk payments in 2014 to health insurers offering plans on the Obamacare exchanges after the companies complained a recent policy change allowing people to keep their insurance policies had changed the financial equation.

The rule, published on Monday in the Federal Register, lowered the threshold at which risk payments kick in for the sickest health plan members. The government proposed paying insurers 80 percent of claims greater than $45,000 in 2014. Previously the lower limit was $60,000…

In addition, the government has proposed a state-specific adjustment for risk payments based on how many people in the state extend their current polices, Citibank analyst Carl McDonald explained in a research note.

Insurers thought they’d have enough profit flowing in from healthy people who’d been forced onto the exchanges that they wouldn’t need federal help in paying off claims below 60 grand. Thanks to Obama’s need to protect himself and his party politically, that calculation has now changed — and your money will make up the difference. If you’re one of the lucky few million who’s received a cancellation notice this year, that means you’re one of the law’s “losers” twice over. Happy Thanksgiving.

Oh, almost forgot: The feds don’t have a way of transmitting these individual risk payments to insurers yet because … that part of the ObamaCare website hasn’t been built yet:

Beyond the troubles with enrollment forms, which have been evident since the marketplace opened on Oct. 1, insurers are anticipating problems if IT workers from the government and outside contractors cannot soon build other parts of the online system that are running behind schedule.

For instance, starting in mid-December, the government and each participating insurance company are supposed to perform a monthly “reconciliation,” to make sure that each side has the same list of new customers, the benefits chosen by the consumers and the government subsidies for which they qualify. That feature of the online system, however, has not been built, according to people close to the industry and government officials.

Nor can the system handle another feature, scheduled to be ready when health plans take effect on Jan. 1, in which insurers are to be paid extra government money, through a method known as “risk corridors,” if their new customers are old and require expensive medical care. “It’s not built, let alone tested,” the industry official said.

]]>http://hotair.com/archives/2013/11/26/payoff-feds-to-increase-risk-payments-to-insurers-in-return-for-un-canceling-plans/feed/71288674Rubio to introduce bill that would repeal “risk corridor” — a.k.a. bailout — provisions of ObamaCarehttp://hotair.com/archives/2013/11/15/rubio-to-introduce-bill-that-would-repeal-risk-corridor-a-k-a-bailout-provisions-of-obamacare/
http://hotair.com/archives/2013/11/15/rubio-to-introduce-bill-that-would-repeal-risk-corridor-a-k-a-bailout-provisions-of-obamacare/#commentsFri, 15 Nov 2013 19:01:08 +0000http://hotair.com/?p=287386Goooood politics. I’m 90 percent sure it won’t pass, but last week I would have told you I was 100 percent sure. At the rate O and his boondoggle are melting down on the Hill, there’s no down side to trying to force Democrats to vote on all sorts of bills that would chip away at parts of O-Care. Worst-case scenario: They fail but with some Democratic support, which means a rolling PR disaster for the White House and a very small margin of error going forward lest the Democratic turncoats in Congress start thinking maybe it’d be better to repeal this thing and be done with it.

How about it, Mary Landrieu? Yes or no to tossing billions in hard-earned tax money at insurers to clean up the gigantic mess you, they, and Obama have made?

Obamacare includes a provision that allows the federal government to funnel taxpayer dollars to insurers that face the prospect of losing too much money under the new health care law, and conservative critics want to repeal it.

Sen. Marco Rubio, R-Fla., said the provision could amount to a bailout of the insurance industry, which stands to lose if the troubled Obamacare exchanges fail to enroll enough people to make the system financially viable. Obamacare enrollment has already been stymied by glitches at the healthcare.gov sign-up site and it could be dampened again under an administrative fix President Obama proposed this week to resolve problems with millions of cancelled policies…

“We need to protect taxpayers from having to bail out anyone as a consequence of Obamacare,” Conant said in an email exchange with the Washington Examiner. “Rubio’s bill will fully repeal the ‘risk corridor’ provision in Obamacare, preventing a bailout.”

If you’re unfamiliar with the “risk corridor,” read David Freddoso’s short but useful explainer from last month. Nutshell version: An insurer who’s offering a plan on the ObamaCare exchange sends a cost projection for that plan to HHS. If it comes in a bit under cost, they cut a check to HHS for the difference; if it comes in a bit over cost, HHS cuts them a check to make up the shortfall. It’s a way for insurers to spread the risk of cost miscalculations among themselves. Adrianna McIntyre, the economist who inspired Freddoso’s post, calls it “insurance for the insurers.” So far, so good. Problem is, there’s no cap on losses that HHS might be forced to cover if lots and lots of individual plans end up costing way more than the insurers projected. If a plan’s actual cost exceeds 103 percent of the projection, Uncle Sam covers half of the overrun; if actual cost exceeds 108 percent of the projection, Uncle Sam covers 80 percent.

If ObamaCare was working perfectly, the risk of many plans coming in way over budget would be small. Healthy people would be enrolling by the millions on Healthcare.gov, flooding insurers with tons of new revenue they could use to pay for sick people’s preexisting conditions. Thanks to President Bumblefark’s incompetence, though, Healthcare.gov is a smoking ruin; young healthy people can’t sign up, which means no cash for insurance companies to cover their hefty new expenses. That leaves Uncle Sam partially on the hook for the difference. The punchline, though, is that Obama’s “fix” yesterday only makes it worse. If insurers bring back the old, cheap plans, all of the healthy people who’ve had their coverage dropped and who are supposed to provide new revenue by buying the more expensive exchange plans will revert to their old coverage. That’ll leave the exchange plans with even more sick enrollees and fewer healthies, compounding insurers’ losses. Uncle Sam’s on the hook for even more now.

Via the Weekly Standard, here’s David Cutler, one of the architects of O-Care, admitting last night that an insurance industry death spiral isn’t out of the question here. In fact, though, the “risk corridor” is designed to reduce the risk of a death spiral; so are the taxpayer subsidies for lower-income enrollees on the exchanges, which can (at least theoretically) be increased to keep pace with premiums if/when they start to rise. Without the risk corridor and the subsidies, the only way for insurers to make back their losses this year is to jack up premiums next year, which will further discourage healthy people from enrolling, which in turn will make the exchange risk pools even sicker and more costly, and thus the death spiral is set in motion. Thanks to Uncle Sam’s “generosity,” they might not have to do that. But all of this points to the same basic fact: The more adverse selection there is on the new exchanges, the more unanticipated costs there’ll be. Those costs will be borne either by the insurance industry, if Rubio’s bill prevails and the “risk corridor” provision is eliminated, or mostly by the federal government, in the form of a bailout and higher subsidies. The political challenge of Rubio’s bill for Democrats is that they don’t want to be on the wrong side of yet another TARP-like government giveaway to an unpopular industry, but on the other hand they can’t take away insurers’ “risk corridor” safety net or else the industry might turn on ObamaCare and then the whole thing will implode. Dilemmas, dilemmas.

]]>http://hotair.com/archives/2013/11/15/rubio-to-introduce-bill-that-would-repeal-risk-corridor-a-k-a-bailout-provisions-of-obamacare/feed/142287386Quotes of the dayhttp://hotair.com/archives/2013/11/09/quotes-of-the-day-1550/
http://hotair.com/archives/2013/11/09/quotes-of-the-day-1550/#commentsSun, 10 Nov 2013 02:01:39 +0000http://hotair.com/?p=286585The setting is the February of 2010 health care summit with Republicans. Minority Whip Eric Cantor is addressing the president directly on the issue of people losing their insurance due to the Affordable Care Act:

CANTOR: …Because I don’t think you can answer the question in the positive to say that people will be able to maintain their coverage, people will be able to see the doctors they want, in the kind of bill that you are proposing:

OBAMA: Since you asked me a question, let me respond. The 8 to 9 million people you refer to that might have to change their coverage — keep in mind out of the 300 million Americans that we are talking about — would be folks who the CBO, the Congressional Budget Office, estimates would find the deal in the exchange better — would be a better deal. So, yes, they would change coverage because they got more choice and competition.

***

Obama insisted anew Thursday that the problem is limited to people who buy their own insurance. “We’re talking about 5 percent of the population who are in what’s called the individual market. They’re out there buying health insurance on their own,” he told NBC.

But a closer examination finds that the number of people who have plans changing, or have already changed, could be between 34 million to 52 million. That’s because many employer-provided insurance plans also could change, not just individually purchased insurance plans

Administration officials decline to say how many employer-sponsored plans could change. But those numbers could be between 23 million to 41 million, based on a McClatchy analysis of estimates offered by the Department of Health and Human Services in June 2010.

CEO Jack Larsen, under fire for separating seniors from their MDs, took out full-page ads to explain that cuts in Medicare spending forced the ­insurer’s hand.

“We are working to collaborate with a more focused network of physicians to help us provide higher quality and more affordable health care coverage to meet the needs of our members, and help them get more from their health plan benefits,” Larsen said.

“This work has become even more urgent in light of the severe funding reductions for Medicare Advantage plans that have come from Washington.”

***

Why is this an immediate challenge? Because the hundreds of insurers offering plans on the federal exchange will begin pricing for 2015 in just a few months. Their chief financial officers should be sweating bullets about the obstacles that HealthCare.gov’s glitches have put in the path of enrollees. Fortunately, October was an early shopping month, mainly for browsing and for those who are sick and highly motivated to get coverage. It wasn’t an important month for enrolling the “young invincibles” — uninsured young people who don’t think they need health care — who will subsidize older, sicker enrollees. But the longer HealthCare.gov remains clogged, the more young invincibles will be discouraged from joining. If that happens, enrollment in the 36 states using the federal exchange will resemble small, high-risk insurance pools composed mainly of the sick — potentially causing premiums to soar in 2015.

Insurers must set rates for 2015 in some states by the end of February, and in most states before June. They can’t raise their rates on plans in the federal exchange now; their prices are locked in for next year. Nor can most carriers recoup any 2014 losses by raising premiums for 2015: Unless most competitors do the same, hiking premiums will chase away any healthy customers they have. But that is the imminent danger — a general rise in rates among health plans on the federal exchange.

The administration can try to head off the problem, or it can blame insurers after the fact. To convince skeptical CFOs that October 2014 will be very different from today, first the Web site and the information systems behind it must work. Additionally, the administration has to prove that it can effectively manage the world’s largest commercial health insurance store. And the president has only a few months to do so…

2015 is essentially here already.

***

Louisiana’s Mary Landrieu is hoping to cauterize that crisis with a bill that supposedly allows people to keep their plan if they stay current on premiums. About 80,000 Louisiana policy holders—or half of the individual market—will be dumped in 2014, according to the state’s insurance commissioner.

Here again, complex insurance contracts take months to plan financially and negotiate with providers. They could be renewed for maybe a few months but not forever, which is why the Landrieu bill is simply a new mandate ordering insurers to continue offering these plans. But the hard business truth is that these plans are already gone. The only way to solve the problem is a time machine to go back to 2010 when HHS published its deliberately restrictive rule on “grandfathering.”

The Shaheen and Landrieu proposals are merely ploys for these Democrats to distance themselves from ObamaCare while still embracing it. But they can’t have it both ways. Either they can vote to take down the whole regulate-subsidize-mandate apparatus for a year and propose major reforms to prevent a reprise of the last six weeks. Or else they will be enablers of the current and future disruptions, cancellations and limited health choices.

***

Administration officials scrambled Friday to find a quick fix to a problem President Obama said would never come about — millions of insurance policies canceled for people who have health plans they want to keep.

But as the controversy threatened Obama’s efforts to reassure fellow Democrats that he had things under control, administration officials and policy experts said they didn’t yet have a plan to solve the problem without further bogging down the president’s signature health reform plan…

Reinstating canceled policies would be a scramble for insurance companies, whose coverage plans need to be approved by state regulators — a process that can take months…

If millions more people can suddenly invoke the grandfather clause, said one analyst, that would change the assumptions insurers made when they calculated the premiums they are now offering in the marketplace…

If millions of people who have coverage now can keep it as long as they wish without complying with new rules, Claxton said, the healthiest of them will probably choose to do so — until they get sick and decide to cash in on the benefits of the new marketplace.

***

The administration has run out of political bullets. Unless the Affordable Care Act starts working, and delivering big benefits to more people than are losing their insurance, it can’t do much to improve those sagging poll numbers.

The second sign is that the president actually said he was sorry that some people had gotten the misimpression from him that they could keep their health insurance, when they were actually going to lose their policy and be forced to buy a more expensive one. Conservatives may complain that the apology was inadequate, since the president did not admit that he’d misled people. But this is the first time I can remember this president apologizing like this. It may be sincere. It is also a sign that his administration is backed into a corner. It can’t deny that this is happening, nor can it blame anyone else. What’s left to it are expressions of regret.

Politico reports that the president has also ordered aides to explore administrative fixes for people who are going to be made financially worse off by their cancelled policies. This would probably involve grandfathering all the existing plans. That will create chaos, and may leave the exchanges with a poorer and sicker pool of the folks who couldn’t buy insurance before. It would also mean conceding that the administration made a grave mistake when it drew the regulations for grandfathered plans so narrowly.

But until the exchanges start working, this is all the Obama administration has in the political arsenal. It may not be enough.

***

Barack Obama is guilty of fraud — serial fraud — that is orders of magnitude more serious than frauds the Justice Department routinely prosecutes, and that courts punish harshly. The victims will be out billions of dollars, quite apart from other anxiety and disruption that will befall them.

The president will not be prosecuted, of course, but that is immaterial. As discussed here before, the remedy for profound presidential corruption is political, not legal. It is impeachment and removal. “High crimes and misdemeanors” — the Constitution’s predicate for impeachment — need not be indictable offenses under the criminal code. “They relate chiefly,” Hamilton explained in Federalist No. 65, “to injuries done immediately to the society itself.” They involve scandalous breaches of the public trust by officials in whom solemn fiduciary duties are reposed — like a president who looks Americans in the eye and declares, repeatedly, that they can keep their health insurance plans . . . even as he studiously orchestrates the regulatory termination of those plans; even as he shifts blame to the insurance companies for his malfeasance — just as he shifted blame to a hapless video producer for his shocking dereliction of duty during the Benghazi massacre.

It is highly unlikely that Barack Obama will ever be impeached. It is certain that he will never again be trusted. Republicans and sensible Democrats take heed: The nation may not have the stomach to remove a charlatan, but the nation knows he is a charlatan. The American people will not think twice about taking out their frustration and mounting anger on those who collaborate in his schemes.

***

Obama had to have a great deal of contempt for the American people to think he could pull this off without consequence, just as he needed it in the first place to think he could push the bill through against the will of the country without repercussions that were entirely justified. Some of his flacks have used the word “sabotage” to describe the choice of many governors not to set up state exchanges, ignoring the fact that these acts are (a) entirely legal and (b) represent exactly the sort of judgment governors are elected to make.

“Sabotage” hardly describes this—it is called politics—and it hardly describes the train of disasters that is in the process of self-repealing this program. The website is broken, and not likely to be fixed quickly. The people who have persevered and managed to enroll are mainly 50 and over or younger people who are going on Medicaid. Furious voters are besieging their elected representatives. Democrats, especially those running in 2014, must fear facing opponents quoting Edie Littlefield Sundby. Obama is a lame duck with an approval rating now around 40, and he can no longer save them.

Here you have hardworking people who were repeatedly told not to worry, that their coverage would stay the same and—if anything—their costs would go down. Just the opposite is happening…

That’s why I’ve authored a bill to delay this law’s individual mandate tax – as has the senior senator in our state, Dan Coats. After all, how can you tax people for not buying a product from a website that doesn’t work?

]]>http://hotair.com/archives/2013/11/09/quotes-of-the-day-1550/feed/378286585Obama: I’d like to apologize for lying to your faces several thousand times about keeping your plan if you liked it; Update: Or nothttp://hotair.com/archives/2013/11/07/obama-id-like-to-apologize-for-lying-to-your-faces-several-thousand-times-about-keeping-your-plan-if-you-liked-it/
http://hotair.com/archives/2013/11/07/obama-id-like-to-apologize-for-lying-to-your-faces-several-thousand-times-about-keeping-your-plan-if-you-liked-it/#commentsThu, 07 Nov 2013 23:41:11 +0000http://hotair.com/?p=286357He tried to spin away the Big Lie with another Big Lie, but when that didn’t work, he was left at a crossroads. Triple down with a Big Lie about the Big Lie about the Big Lie, or bite his lip and apologize? The quote: “I am sorry that [people who’ve lost their insurance] are finding themselves in this situation based on assurances they got from me.” I’m actually not sure what that means. It’s not his assurances that have put them in this situation, it’s the law he signed and the regulations he approved that sandbagged them. Or is he suggesting — not incorrectly, mind you — that maybe he and his pet boondoggle wouldn’t have gotten quite as many votes if he’d been honest?

Conn Carroll asks an excellent question:

I dont get it. Why is Obama apologizing for people losing their insurance? Last week he said they were all junk policies. Was he lying then?

Exactly. Until about an hour ago, the official Democratic line on the Big Lie was that O had, perhaps, “exaggerated” the extent to which people would be able to keep their plans, but that was A-OK because only crappy plans by scam artists are being denied grandfather status. That’s actually the biggest lie of all. Even some liberals are acknowledging the underlying reality. So what’s the new White House position? Are the old plans being properly and deservedly euthanized or is O sorry for their loss?

Update: Here’s the transcript of the full exchange. Is this really an apology?

CHUCK TODD:
Thanks to you. I’ll start with health care. It’s probably the most quoted thing or requoted thing you have said in your presidency, “If you like your health care plan, you can keep it.” You said it a lot during the run up. At this point, though, it’s obviously something– a promise that has not been able to be kept. Just today, the Denver Post — 250,000 people in Colorado are seeing health insurance policies cancelled. Some of those people liked those policies. And they can’t keep them. What happened?

PRESIDENT OBAMA:
Well– first of all, I meant what I said. And we worked hard to try to make sure that we implemented it properly. But obviously, we didn’t do enough– a good enough job– and I regret that. We’re talking about 5% of the population– who are in what’s called the individual market. They’re out there buying health insurance on their own.

A lot of these plans are subpar plans. And we put in a clause in the law that said if you had one of those plans, even if it was subpar– when the law was passed, you could keep it. But there’s enough churn in the market that folks since then have bought subpar plans. And now that may be all they can afford. So even though it only affects a small amount of the population, you know, it means a lot to them, obviously, when they get– this letter cancelled.

Follow the link. He goes on and on and on from there about how much “better” the new plans on the exchanges are. And you know what he means by that: “Better” = more comprehensive, period. Cost and access to a sizable provider network are almost entirely irrelevant to the calculus. No one seriously believes that, including him, but he needs to pretend in order to justify pushing healthy people into more expensive coverage. Comprehensiveness is mainly just the excuse to gouge them for higher premiums. He’s not sorry at all that people’s plans are being canceled.

]]>http://hotair.com/archives/2013/11/07/obama-id-like-to-apologize-for-lying-to-your-faces-several-thousand-times-about-keeping-your-plan-if-you-liked-it/feed/279286357Is Obama a manufacturing genius?http://hotair.com/archives/2012/02/17/is-obama-a-manufacturing-genius/
http://hotair.com/archives/2012/02/17/is-obama-a-manufacturing-genius/#commentsFri, 17 Feb 2012 21:15:09 +0000http://hotair.com/?p=180618Bruce Bartlett has an interesting column at The Fiscal Times posing the question, can Obama’s manufacturing initiative really work? Some of the conclusions will be controversial at best, but it’s worth a read if only for some important history lessons. One of the key items takes a look back at a time when Japan was still the envy of the world – manufacturingwise at least – and the United States government was poking around in the then emerging technology of HDTV.

Even among Republicans there was admiration for the Japanese model. During the George H.W. Bush administration, where I worked in the Treasury Department, it had strong supporters at the Commerce and Defense departments. One of the key battlegrounds was high-definition television (HDTV), which was just in its infancy. Commerce was very keen to support American manufacturers of HD televisions and DOD agreed in order to support the American semiconductor industry. (Semiconductors are a major component of HDTV.)

The author notes that there was internal strife in the administration, with Treasury and the Council of Economic Advisers advising a hands off, free market policy. In the end they were shouted down and Washington chose to place a bet on American semiconductors. How did that work out?

Years later, one of the people at Commerce who supported subsidies for HDTV admitted to me that the technology that it wanted to support turned out to be inferior to that which ended up being the standard. It also turned out that the real money was not to be made manufacturing HDTV’s, but in producing the programming, an area where the U.S. remains dominant.

The Obama administration should, in some sense, be supported for taking an interest in seeing American manufacturing restored. But whether it’s Barack Obama or his eventual GOP challenger in office next year, we need to be wary of what kind of support is offered.

On the one hand, we could see more Solyndra style, federal nose under the tent activity trying to apply some ham handed “help” to manufacturing under Obama. One of the alternatives, offered by Rick Santorum, would see a bizarrely deformed tax code offering special preferences to manufacturing. Unfortunately, both of these ignore the lessons of the G.H.W.B administration and their experience in meddling with the free market. As the author found, a group of elected bureaucrats with little to no knowledge or experience in technology and industry are almost perfectly unsuitable to pick winners and losers. Offer a level playing field with the fewest impediments possible and the clearest path to success and prosperity, and innovation (along with the associated jobs and GDP) will follow.

Those who fail to to learn from history are doomed to repeat it. I’m sure I read that somewhere…